New Crypto Report Says US Government Spends $5.7 Million on Blockchain Forensics
Apparently, the inability to track the origins of cryptocurrency transactions is an issue that concerns the US government. According to the report published by Diar, a research company, the government has spent over $5.7 million on contractors to perform blockchain analysis, including trying to link crypto wallets to their individual owners. As expected, these actions are usually conducted through bureaucratic agencies.
Typically, digital currencies are advantageous over fiat money because the transactions are anonymous. However, this anonymity is not entirely guaranteed because there are some tools and virtual curacies that offer tracking capabilities. If these tools fall to the right hands, it is fairly simple to establish the owner of a particular crypto wallet.
If a user’s crypto address becomes public, a third-party can use this information to trace back the transactions and determine the actual identity of the wallet’s owner. Usually, such vital information is leaked in platforms that require a user to register before transacting in digital currencies. Moreover, any user that interacts with a wallet whose address had been leaked increases their vulnerability to this kind of exposure.
Most of the money used on blockchain analysis ($2.2 million) was spent by the Internal Revenue Service (IRS). Specifically, the IRS contacted crypto forensic experts nine times with the intention of establishing the identities of individuals behind certain cryptocurrency transactions. The second entity in terms of expenditure was the Immigration and Customs Enforcement (ICE) agency which spent $1.5 million on nine contracts. The next institution was the FBI, which spent $1.1 million on a dozen contacts. Surprisingly, the Securities send Exchanges Commission (SEC) spent a paltry $185,000 on these investigations. Concerning contacts, Chainalysis was the preferred forensic company, raking in $5.3 million of the $5.7 million.
The increase of government expenditure on this sector has led to the development of the blockchain forensics niche. At the time of writing, the sector had amassed a revenue worth $29 million.